A Simple Macro-Economic Growth Model Part III The Model in Figures. ESRI Memorandum Series No. 5 1960(?)

Geary, R.C. (1960) A Simple Macro-Economic Growth Model Part III The Model in Figures. ESRI Memorandum Series No. 5 1960(?). [Policy Paper]

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Abstract

Three appended tables give the values of the macro-economic variables, Table A on the assumption of a 3% rise, Table B a 5% rise and Table C a 7% rise in net national product, (NNP) for three time intervals (t) 5, 1C, 15 years, three net incremental fixed capital output ratios (k) of 3, 4 and 5 and three saving ratios (s) of 5, 10 and 15 per cent. These parameters are defined in Part I. The rate of interest (n) on the import excess is assumed fixed at 79. The number of sets of values of the macros Y, C, S, V, M (= M’ + M"), X and N is accordingly 81 (= 3x3x3x3). This part of the exercise is designed to obtain the first approximation to a rate of increase (r) which might be adopted for a National Plan having regard to the realities of the Irish situation. Since many of the figures in the tables are going to appear incredible it is necessary to point out at the start that, with one exception, namely the part M" of imports, they are the results of simple arithmetic applied to the accounting identities I(2). The only element in the exercise which involves economic theory is the assumption that the import ratio m grows pari passu with rate of growth of the economy - percent for percent - for the reasons given in Part I. This assumption of course, exacerbates the import excess situation, regarded as the principal criterion of feasibility of any plan. As already remarked in Part I, the one-one relation of import ratio and NNP rates of growth is a conservative one: freer trading conditions would be conducive to increasing, the ratio to the further detriment of the import excess.

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